Monday, December 31, 2012

It was an interesting day - a lot of junior mining stocks went up, a lot of junior mining stocks even went up 5%-10%. Go check your account, it'll look good.

Why? Is it because, once you take out the Joo-controlled Bilderberger-influenced institutional selling, the market starts acting healthy again? That the only people selling are the hedge funds that are driving the price down?

Nevertheless, I have one little comment to make. I forget where I read it, but apparently a few major funds were behind much of the junior mining dumpage that we saw a week or two ago - Dec 20-21, according to the chart.

GDX and GDXJ are not struggling since then, and do seem to have the odd buying surge behind them. It seemed to be a bit of a volume spike too.

So unless a major economic catastrophe hits (and I don't count the failure of US budget talks as a "catastrophe" - it should have very little effect on US GDP, and this'll come at a time when the broader US economy and the world economy are improving), I'm suspecting right now that things should look up from here.

I'm actually worried about whether or not the PDAC curse will even hold in 2013.

But anyway... I dumped some BTO, in favour of that other producing miner stock IKN mentioned this weekend that should have a better bounceback to it.

I have a few thou in tinycap multibag plays (kinda hard not to when a 1.5-cent gain can make you $1000), and of course my Calibre Mining.

Saturday, December 29, 2012

Well, since Ritholtz has been shouting from the rooftops that everyone should see the movie Lincoln, and since Rotten Tomatoes has it down as one of the top 100 films of the year (most of the others are stupid documentaries and shit, so it's not as if the list is informative), I decided to check it out.

With me, it's not whether it's a historical document that's important - it's whether the actors can make me give a crap enough to sit through the whole two and a half hours. And there's one problem with a lot of stupid American movies about their own history: most of the time it's sappy shit meant to reinforce their cultural narrative. I'm not an American, so I end up watching most of their historical movies with a critical eye, pointing out "oh, here's where they create the myth that X, and here's where they try to make themselves feel good about Y, and here's the biting current social commentary about Z".

The other problem I have with historical movies more generally, at least the newer ones, is how they tend to get post-modern just to be clever. The Iron Lady was one example - it's all told in flashbacks, framed in a study of how Thatcher's now got the Alzheimer's and doesn't understand her husband is dead, so we should all feel sorry for her, as if the fascist bitch ever had any sympathy for my class. Fuck her.

But Lincoln didn't get all postmodern or clever, and so was fun to watch, and one reason was that I kept seeing all my favourite actors. I have no clue who Daniel Day-Lewis is - apparently he doesn't do movies very much. But still, Big Fat Old James Spader was there, as was Joseph Gordon-Levitt (who was in Inception); Jackie Earle Haley (Rorschach from The Watchmen) had a decent part as the Confederate VP. Tommy Lee Jones has what turns out to be a pivotal role in the story. David Strathairn was bad guy Noah Vosun in the third Bourne movie, but was also good guy Eddie Cicotte in Eight Men Out. Even S. Epatha Merkerson from Law & Order shows up, as well as (apparently) about 30 other L&O actors who've played multiple minor parts, almost as if they cast this in New York or something.

I like seeing my favourite little-known actors when they show up in other movies, so that alone was fun for me.

As for the story, the movie's all about the horse trading that Abraham Lincoln had to do in January 1863 in order to pass the 13th Amendment, which apparently abolished slavery or something.

Spoiler:the Amendment passes and slavery gets abolished.

Now, by the way, about January 1863, when almost all off this movie takes place: it really fucking annoyed me how the last few minutes of the movie are all about him going off to the opera to get assassinated months later. If Spielberg didn't know that Lincoln's assassination happened in April of that year, two and a half months after everything else that goes on in the movie, then I'm sure someone told him - and was probably immediately fired. I guess since it's a fucking Spielberg movie you'd have to expect some rewriting of history in order to work in some sentimental ahistorical tearjerker bullshit. Cunt. Please god don't let that twat get a Golden Globe for this movie. The last 20 minutes didn't need to be filmed - it was all superfluous.

As you can see, Spielberg really annoys me.

But the rest of the movie was pretty good, and probably worth seeing. It's not as bad as most American historical movies, and the characterization is rich and deep. It's not as great as the American media makes it out to be, but you won't waste your time watching it.

Unless you want explosions and car chases and monsters and sex and stuff. It has none of those.

NY Times - is the bond market done? There are some very interesting things in this article, including an important observation by James Grant. So, what happens if bonds are done? Do equities end their bear market, y'think?Ritholtz - America's cars and appliances are getting old. Pent-up durables demand would be positive for the US economy - if only the plutocratic scum robbing the country blind could let the unwashed masses see an increase in wages for the first time in 30 years, the unwashed masses might start satisfying that pent-up demand.

Louis Farrakhan says "Jesus was a black man." Well, Jesus liked Gospel, called everyone "brother" and couldn't get a fair trial, so it may be true

"Police search for three armed men in home invasion." STANDARD HANDCUFFS WON'T WORK, PEOPLE

Arctic rivers add toxic mercury to the Arctic Ocean. This sounds like something that came from Hg wells

Massachusetts' largest white oak killed. Police are rounding up all the black oaks in the areaNew research discovers difference in visual acuity between men and women: men have greater sensitivity to fine detail and rapid movements, and women can see everything you ever did wrongMissing algebra teacher found dead -- investigators looking to solve for why, query exMother-of-two disfigured by seven tumors on her face says, "Tumor would benign"Cougar enters home through dog door. In related news, your mom started drinking againSteven Spielberg's "Lincoln" opens in theaters, despite the fact that Lincoln historically doesn't do well in theatersMan enters zoo enclosure to feed the tigers, succeeds

Friday, December 28, 2012

Firstly, I'm not the type to go for superhero movies. I used to read comics back when I worked night shift at a convenience store, so I can't play the "superheroes are ghey" card; rather, I get annoyed at how so many of the movies are really retarded compared to the original comics.

For example, Daredevil was a really fantastic series, at least in the late 80s; the Inferno issues were especially stunning, the highlight to a story arc that I worried would jump the shark if it wasn't ended perfectly. But there's no way I'm watching a fucking movie where he's portrayed by Ben Affleck.

Similarly, a lot of the superhero movies were stupid filler: the Wolverine one was a fantastic example of a movie that didn't even have to be made.

So, why watch The Avengers? Especially considering I didn't like Iron Man, and never even saw Thor? (And apparently there was even a Hulk one too?)

Yeah, I'm a Buffy nut. Also loved Firefly. Didn't really like Angel or Dollhouse, though. But Whedon can make something a hell of a lot of fun when he has the right material to work with, he's especially done well with superheroes (Buffy, essentially), and it would be neat to see him with a $200M budget and enough CGI to blow up the world convincingly.

And Whedon did a great job with this one.

So anyway, there's this bad guy Loki who's working with these evil aliens. So Nick Fury (who I don't remember being black, but Samuel L. Jackson does a mean and brooding enough job to play the part so what the hell) asks for help from Iron Man, Thor, Bruce Banner, Hawkeye, Captain America, and some chick. Then, there's lots of fight scenes and stuff gets blown up, and the good guys win.

The characters are fun, at least some of them. Thor and Captain America are basically a couple pretty boys good for nothing but muscle (basically Riley Finn with superpowers times two); that's the poor part of the character group. After that, Bruce Banner is the hyperintelligent supergenius who also often turns into a dangerous world-destroying force (basically Willow as a guy); Iron Man is sort of like a wise-cracking Buffy in a metal suit; Hawkeye is maybe Gunn, at least when he's not suffering the mind-control thing; Nick Fury is maybe Giles, but sort of evil and underhanded, maybe in an ultimately beneficent way, which Giles was at times anyway. And the chick is sort of Buffy too, at least insofar as all she can do is fire a couple handguns and do some close combat, while the guys around her are all various levels of indestructible. Kinda sucks to be her. Oh, she interrogates well too. Great.

Annoyed that I'm making this all about Buffy? Well, it gets worse: the transdimensional gate that gets opened up over Manhattan is like Buffy Episode 100, especially since it's opened up by an unbeatable god (Loki this time, Glorificus in Buffy). And the Avengers end up at each other's throats, due to the machinations of the bad guy, which was a recurring theme in the later seasons of Buffy (that season's bad guy tried to split the group up, but then they'd get back together before finally defeating the bad guy).

But still, those were the good things about Buffy, and if you haven't watched Buffy, you can watch the Avengers and experience all the fun bits of Buffy in 140 minutes. Buffy, Buffy, Buffy.

Seriously though....

It is a very witty movie, in a way that other superhero movies fail to be, and exactly the way you'd expect Whedon to be. Tony Stark gets loads of great lines, from the beginning of the movie to the end, and sometimes moves from one joke to the next so fast that he leaves you reeling on your feet. (Whedon doesn't treat audiences like idiots who have trouble following a conversation. Which is probably why he ultimately got driven out of TV.) But also, Barefoot Gwyneth Paltrow With The Nice Ass gets a few good lines in too, and the chick (I looked it up, it's Black Widow) also gets in some good lines. Samuel L. Jackson obviously gets a few good lines too, they're in his contract: "Well, let me know if 'Real Power' wants a magazine or something" was a good one.

There are even a couple surprising little directorial things that you just wouldn't expect in an action movie - little attentions to detail. Thor falls out of the sky and you actually get to see him skid through a field; nice touch, not action-movie-ish at all. I thought that was neat.

I'm kinda annoyed by the fact that several of the characters are pretty much indestructible: bullets bounce off Hulk, Hulk can punch Thor across the room, Thor's hammer can't be lifted by a mortal but Captain America's shield can stop it, Iron Man's suit can be put in a giant blender and not get damaged - oh and Loki, who's a god, ends up getting thrown around like a rag doll by Hulk (there's a spoiler for you).

It kinda defeats the whole point of superhero movies when they're just so darn super that they don't really have to use their heads to solve anything: when Buffy and the crew went toe-to-toe against Glorificus, they had to enlist the Buffybot, Olaf the Troll God's hammer, the Dagon Sphere, and a wrecking ball, and still she was only destroyed after reverting to human form. These Avenger guys can just punch gods to death.

But meanwhile, the chick Black Widow is basically Jason Bourne and Hawkeye is Legolas.

Annoying.

Anyway, all in all though, it was a great movie, worth seeing again, and I'd actually be happy to watch the sequel, as long as it's directed by Whedon too. 8/10, which for me is a good score.

Today I saw a significant upsurge in the number of "is Daniela Cambone married?" searches coming to my blog, so I went over to Youtube, and lo and behold like clockwork there's another bunch of new Kitco interviews, all based around 2012 review and 2013 outlook.

Here she is interviewing Vince Lanci, who says we are in a central bank driven market.

Hey, Vince? We were in a central bank driven market. Things have changed in the past 2 months and if you'd been following my blog religiously you'd have known that.

And the next doooom won't come from Japan. It'll come from China. I'll bet you.

Seriously Vince, you seem a very reasonable fellow. If you simply turned off all the right-wing propaganda and concentrated on hard data for the next few months, you might see your head clear up quite a bit. Might even make some money.

And then here's Daniela with Erica Rannestad from CPM Group, on platinum and palladium:

Two notes: first, it was very enjoyable to listen to someone on Kitco who actually knows what the hell she's talking about. Because they do tend to interview a lot of boneheads.

Second, it's funny how she notes jewelry demand in China is a buffer for platinum prices.

Cos people don't seem to think that about gold.

Despite the Chinese government hoarding gold and suggesting its own citizens buy gold.

I'm only saying.

And finally, here's Daniela interviewing Jim Rogers, Overlord of Commodities, who is talking about gold, so therefore gold must be a commodity and not an asset class:

Jimboy only gives her 3 minutes of his time, and spends most of it chatting her up, and the rest of it complaining ignorantly about central bankers.

Nevertheless, he's still The One You Shut The Hell Up And Listen To when it comes to commodities, and as he says, "Ah don't know of any asset in historuh that has gone up twayulve yeahs in a row without a dahn yeah."

The common thread in all these interviews?

Daniela's wearing red. But three different shades and three different necklines. Cos she's more stylish than you.

In other news, I've been checking out John Kaiser's site the past couple days, but still can't really say much about it just yet. I suppose I'll write a review of his subscription service soonish, but I really don't want to be a tard about it so I'll have to take my time.

Though long story short, from the little I've looked at so far, he's better than Cookie and cheaper.

Thursday, December 27, 2012

Those of you who mock technical analysis will dislike a lot of what PTJ has to say; my reply is "so where's your billions of dollars, cheese?"

I wanted to comment on a few of PTJ's points, so here we go with partially reproducing the article:2. I see the younger generation hampered by the need to understand and rationalize why something should go up or down. Usually, by the time that becomes self-evident, the move is already over.

3. When I got into the business, there was so little information on fundamentals, and what little information one could get was largely imperfect. We learned just to go with the chart. Why work when Mr. Market can do it for you?

4. These days, there are many more deep intellectuals in the business, and that, coupled with the explosion of information on the Internet, creates an illusion that there is an explanation for everything and that the primary tast is simply to find that explanation.[...]

To me, these three points are really just the same thing stated three times. Basically, he's making the central arguments for TA:

(a) If you want to play by fundamentals, you better fucking well be at the front of the line for inside information; after all, if you're just some schmo reading the news at home, you're guaranteed to be the last to know what's going on.

(b) The price action in the chart, when it fails to confirm your fundamentals-based position, is a dead giveaway that there's some new news out there where, if you had it, you'd be either buying or dumping; but since you don't have it, you're stuck yelling at the screen about how the market's wrong and my god why aren't you going up and can't everyone see what a steal this stock is at 7 cents?

And those two are probably just the same thing stated twice.

So is it wrong to mock TA? No, I don't think so. I guess you could say PTJ is talking about empirical TA.

Example: Sabina Silver might say Hackett River is definitely going to be a mine, and their cash flow will be worth $350M, which they can then plow into Back River. You look at all the numbers and say "yup, based on $30 silver let's go with a price target of $7. Slam dunk." Well, if SBB's price collapses to below the NPV of the Hackett stream, with all of Back River now going for free, then Sabina must be wrong, and you're also wrong. If the price collapsed on the news Glencore is buying Xstrata, maybe that's your reason? Maybe Glencore management has come out and said (privately, not to some fucking peasant like you) that they'll slit their wrists before they ever move into northern Canada?

You might get all that from simply looking at the price action. Market participants can hide a lot of things; but one thing they can't hide particularly well is the relative supply and demand levels for a stock, and that shows up in the price.

You could maybe even use empirical TA to identify underlying problems in the market. JNK:LQD ratio, GLD:SLV, GDX:GLD, all those ratios seem to behave in certain ways in certain markets; really it's about the same as watching $TRIN or $BPSPX. Nothing to mock there.

So is it wrong to mock TA? Sure, sometimes. There's this other thing out there which I'll call predictive TA. It reminds me, more than anything else, of reading Tarot cards, or any other sort of divination you might learn from a wiccan ex-girlfriend.

Now, maybe some people can get it right, sometimes. I know for a fact you can get things spookily right in Tarot, at least once in a while; but that requires (at least subconsciously) developing skills like cold reading, subliminal perception, and intuition. Really all you're doing when you read Tarot (this is right out of a non-wiccan book on Tarot reading) is relaxing your mind, looking at the cards, and allowing them to prod your mind into making the associations and perceptions that allow you to construct a narrative that - wow! - magically predicts something just around the corner. Really it's just an intuition aid.

But a lot of the time all you get out of it is bullshit. Because it's very easy to look at a large pile of equivocal data and see an outcome that you want to see. Or, even better, see an outcome that frightens you. That's the problem with looking at the head & shoulders on the Venture, targeting -800.

Critics worry about the products, many of which channel funds that are
paying customers higher interest rates into loans to real estate
developers and other projects that cannot access normal bank credits.
Such lending can conceal a quagmire of high-risk products and
overlapping debt obligations, they say.

That is the problem. The part in bold and underlined. It's a Ponzi (in the traditional sense of the term) which will collapse. Will the Chinese government manage to bail everyone out?

Friday, December 21, 2012

"A well regulated militia being necessary to the security of a free state, the right of the people to keep and bear arms shall not be infringed."

That's the reason given for why every American is supposedly allowed to have a gun. Several guns. Including assault weapons. And loads of ammo.

OK, fine.

"The right of the people to keep and bear arms shall not be infringed" seems to be predicated on "a well regulated militia being necessary to the security of a free state". That seems to be the argument for why Americans are supposed to have guns.

The 2nd Amendment doesn't seem to suggest, nor do I think would any reasonable person ever think that it suggests, that you can own a gun without responsibilities, or if you hate society, or if you are delusional.In fact, I might be wrong but from what I've heard, it's already accepted under law that you can't own a firearm if you fail a background check, or if you're a convicted felon. So it's already quite obvious that "the people" is not interpreted to mean "every person."

So here we go:

1. Make it law that every state has to establish its own militia. It has to be "well regulated", meaning it's not a bunch of white power queers out in the hill country; the "militia" I'm talking about is a state armed force under the command of the Governor.

That avoids the whole "I'm not serving that commie nigger in the White House wharrgarbl" argument from the State's rights loonies.

You don't like it being under the control of the governor? Fine - make every county have its own militia, under the command of the county commissioner or mayor or however the fuck they do things down there.

I can't stress this enough - from now on when I refer to "militia", I am not referring to a bunch of homoerotic queers from the Nazi party. I am referring to a proper civilian armed force with a command structure, military discipline, and everything.

2. Now, any person who wants to keep or bear arms has to first sign up with their local well-regulated militia.

Ain't that nice? Now you've signed up to actually keep law and order in your neighbourhood! You'll now have a justifiable reason to think you can use a gun to defend lives. After all, now you're not some self-glorifying nutbar in a panic room; you're a deputized member of a well-regulated militia, with a command structure and everything. You're really serving the people by bearing arms!

Also, by becoming a member of the State militia, you've volunteered to be called into mandatory service whenever there's a natural disaster, like a tornado, or a flood. You immediately get called up for a search party when some little kid or some hiker goes missing up in the hills. How Christian of you! And how patriotic!

3. This militia is either self-funded, or funded through State (or local) taxes.

I'd rather make the gun nuts pay for their own "militia", thus earning the privelege of possessing a firearm; but whatever.

If someone says "wharrgarbl taxation is theft", then fine! Make it a nice Libertarian militia, where funding comes through voluntary donations, and whatever they need to make up comes from the militia members themselves. They want a militia? Let them run a fucking bake sale.

You could probably save a shitload of money too, since this well-regulated militia could take over some of the passive functions of the police. Let the militia do the patrolling, keeping order, community outreach and being visible; limit police to actual crime investigation and arrests. Cops probably also have to continue traffic enforcement too. Now you're wasting less cop time on bullshit. And maybe need fewer actual cops.

4. Gun ownership by any one person is only at the discretion of a commanding officer - just like in the armed forces.Anyone illegally owning or possessing a firearm is dealt with harshly under State law.

What a great way to make sure only law-abiding people and sane people can possess firearms! After all, assuming what I said above that it's a well-regulated militia with a proper command structure ultimately reporting to the Governor, no sergeant is going to allow a firearm to be issued to some nutbar in his mom's basement, or some crazy kid in highschool who "doesn't fit in", or some doomer in a fortified log cabin prepping for the coming Joo World Order.

The CO who issues the weapons is thereafter responsible for how they get used. Just like he's responsible for all other behaviour of his underlings. Thus he is encouraged to make damn sure you understand the law and are not a fucktard.

Before anyone is issued a gun, they get fully trained by their militia. Muzzle control, how to shoot, safe storage, all the finer points of the law, and even fun police stuff like de-escalating conflict. Nobody gets a gun if they refuse to learn proper gun use. Militia members get their guns taken away if they violate the rules. Militia members get their guns taken away if they go batshit crazy.

Also, militia members get issued ammunition. You get as much ammo as you should reasonably be expected to need.

5. The "arms" are issued by the militia, not bought at gun shows.

The "right to keep and bear arms" doesn't seem to suggest that people have a right to buy whatever the fuck gun that they want. The arms should get issued out of the State militia's armoury. Look at that! You've just solved the problem of idiots with gun fetishes. And you make it harder for "bad guys" to get their hands on guns.

Let gun shows continue to operate, but limit them to collector's items.

The above system is completely consonant with the beliefs and goals of the less anarchist members of the pro-gun crowd.

a) You have a right to protect yourself, your family, and your neighbours with a weapon. If you join the militia and obey the rules.
b) Bad guys won't have the right to own guns, and have no access to guns because the militia controls all weapon distribution.
c) Nutbars can't get guns either, same reason.
d) Owners will properly store and protect all firearms - or else they get disarmed. Again making it more difficult for nutbars and bad guys to get guns.
e) You'll really have a country where anyone with a gun can legally intercede when they see a crime in progress. Cos he'll be a militia soldier.
f) With each state or county having its own militia, now it's even harder for the UN/commies/Satanic One World Government to conquer the USA. Yay!

At the same time:

i) It will work towards ensuring that all gun owners are responsible and sane.
ii) Legal gun ownership will be governed by a responsible command structure.
iii) Nobody need worry about the fruitcake Nazis in their little hillforts anymore.
iv) I think this might lead to fewer people being massacred.
v) Selfish and hateful people don't get guns. The gun owners are the ones who contribute positively to their communities.

What do you lose under this proposal?

- you no longer have the right to own guns if you're an anarchist, conspiracy theorist, race-warrior, or other fucktard who generally hates society.
- you have to actually follow rules in order to own a killing machine.
- the kind of killing machine you own is dependent on actual need, not on your desire to compensate for a tiny cock or the depth of your irrational fear of a nigger uprising.
- you no longer have the right to stock your own personal arsenal - you need to petition your CO to requisition one for you, and you can only do that if you have a real need.
- you no longer have a right to go on a killing spree.

So what the fuck is wrong with this proposal of mine?

Seriously.

I mean, beside the fact that it's politically impossible? Even with the NRA temporarily stunned into silence by the massacre of a bunch of 6-year-olds by a crazy kid who's mom was a doomer?

We only have time for this short excerpt (huge font and multiple colours removed):

Today renowned silver market whistleblower Andrew Maguire spoke with King World News and said the physical silver market has now diverged to extremes. This is the second in a series of interviews with Maguire lifting the curtain on what is going on behind the scenes in the gold and silver war.But first, here is what whistleblower Maguire had to say about what the commercial traders are up to: “Eric, I’m looking at the action on Thursday and what really strikes me is we’ve discussed the backwardation. Backwardation is clear evidence that both gold and silver futures are oversold. Essentially there are no willing sellers of physical to exchange for a cheaper, further-out-dated futures contract.”Maguire continues:“There is zero relationship between the fundamentals and the current status of the entire US-centric wash-and-rinse cycle which we are seeing right now in the paper market. We are seeing very large physical buying, and it’s based on that discounted fix we discussed. The commercials and the bullion banks, they’ve been buying all that’s being capitulated by the jettisoning longs....“They (commercials) are also absorbing a very large influx of new short interest which they’ve managed to drag into the market. I’m seeing a huge amount of fuel above the market for a rally, and I’m also seeing a very oversold market.”Eric King: “Andrew, for the people out there that are in silver specifically, what are you seeing on the arbitrage?”Maguire: “Silver at one point at the highs in Shanghai was trading at a $1.75 premium. That means a single contract was trading at an $8,694 premium to a Comex contract. That’s ludicrous. That really gives you a much better picture (of what’s going on in the physical market).There are reasons why silver or gold may trade at a premium in Shanghai, but not to those kind of degrees. We’re now reaching extremes, the kind of extremes you rarely see. And the kind of extremes we saw, not even that high (in terms of premium), back in August when we bottomed.Silver is migrating into a much more physical market and we are seeing very few participants wanting to play in this rigged futures market any more. What I am certain of (right now) is that the physical market has diverged to extremes. As a result it will overrun these short positions.So any further discounting from here is going to force things to really go badly for the two largest short banks. And they are looking for an optimum exit next year anyway. I would say the capitulation we are seeing right now is a classic bottom.”

in 2013 the Fed, alone, excluding all the other central banks, which as we pointed out earlier is vary naive, will conjure out of thin air enough 1s and 0s, equivalent to $1 trillion, or enough money to buy 11% of all the gold in existence in the world.

(PS Zerohedge's math is wrong. Lollipop to the first person to figure it out.)

Wow... so obviously gold should be skyrocketing right now, eh? If not for the scheming of those evil Joos!

"We have made a decision to report on Aurcana, a little silver company. The market is bad, and there are broken promises everywhere by everybody in the market, and at this point we do not know which way is up and which way is down, because things are horrible in this space, but this coverage business is part of our business, so we will issue.

However, we have been burned terribly in the last year, at a minimum, so any report now must be reviewed and signed off on by the chain of command, which right now is largely out having a drink, but when they come back they will review the work product and their comments must and will be incorporated somewhere in that report, even if the insertions make the report arguably a jumbled mess, as this is also to give us the most cautionary wiggle room possible...."

Note to all you dolts posting on blogs and boards from the bank or investment house you work at: your bosses know you're doing it and they'd like you to stop. You're wrecking your industry's image.

Let's make fun of some miners whose charts suck, shall we? After all, I don't own them, so why not?

Tower Hill is printing a lower low. MACD crossing down. I guess Livengood will never be a mine.

Sabina Silver is falling into the great chthonic abysm*. I guess Backbacon River will never be a mine either.

And B2Gold is... wait, what? I'm calling doooom on B2Gold? Well, it's dropped so hard that, to me, it's now looking like it wants to hang out with its old ex-girlfriend at the three dollar price point. Giggity.

Sorry Clive, but your chart sucks right now.

* - note to Google: you idiots, fix your grade-three-American spellcheck. "Chthonic" is indeed a word, and so is "abysm".

It is intriguing that gold hasn't been able to break $1800 since short yields hit zero, sure. Interesting correlation there.

But gold isn't a derivative. Gold is a commodity. (It's only an asset class to rogue bloggers living in caves on the shore of Lake Titicaca.) Ultimately there should be supply-demand determination of its price, no?

So what does zero-bound short yields have to do with gold price? I would assume that the argument "oh, yields can only go up from here" could hurt the price of gold if interest rates were about to go up to try to tighten the leash on an overheating economy. I mean, tighten the leash and all of a sudden the more inefficient developing-world economies will slow down strongly, and then you end up with less Asian wealth to buy physical gold.

But we're not there, are we? Are we expecting less Asian wealth creation over the next year? Or more? Zero yields are different this time - this is an attempt to boost the world economy out of zero growth. Or have we forgotten all the wharrgarbl of the summer and fall, where we were about to fall into a worldwide depression?

First, please note I've changed the Bollingers to show the 3SD lines, instead of 2SD. Because we're right at -3SD down right now. It's rare to get -3SD out over the past 6 months, but remember that when you do (e.g. October 15) the price can still go down a lot farther - just with less momentum.

Also note both are lower lows. Shit's broken.

Also note RSI is <30 for both of these. Which doesn't mean it can't go lower, but it does mean we're getting into silliesville.

Also note that whatever the heck happened after August 20th to give us the PM boosts we got at the end of the summer, it's all been bled off by now.

Also note that we've got some real blowoff volumes happening in both the ETFs. These charts are as of 11:30AM, which is only 30% of the trading day.

I'm mildly curious if $152 is the bottom in PPLT. Seems like a horizontal point of importance. Bunged it a couple times already, so maybe this time you'd expect it falls through? But in that case, do gold and silver follow?

I dunno... you wanna triple-short gold and silver right now? It makes no fundamental sense, but the chart is the chart after all....

So what is this supposed to be telling me? Has the mid-term trend for 30y/2y changed? And thus gold should go down? But the bonds are still in the range of the past few months. And why has gold been going down since Nov 26th? That seems to be the wrong direction according to this chart.

Here's the weekly:

Looks like the 30:2 yield spread and gold positively correlate? Is that it? Cos the bonds aren't doing anything strange right now. Very narrow range, very boring.

Again, I'm saying that US bond yields should have nothing to do with the price of gold - except in the mind of some coked-up hedge fund failure who's failed to make money all year because he's a failing failure who failed.

Ritholtz - "quit it with the 'wharrgarbl fiscal cliff'." As he points out, the market's been going up ever since this fiscal cliff bullshit's been in the MSM news. A very rare bit of wisdom from Ritholtz. And as he hints at in this post, earlier he's noted that the whole "fiscal cliff" noise was really started by CNBC, in an attempt to bow to the will of their masters by demanding that the government forestall the expiration of the Bush tax cuts.

Bespoke - gold testing 200DMA. Don't read this assuming it's important, but only assume that some people think it's important.

Economic Observer - why China's corruption fight may be for real. Again, that would be very good for China (stopping capital's illicit flight to Singaporean bank accounts and redirecting it toward productive endeavour will have a positive effect on GDP); but I darn well betcha it'll be bearish for gold.

China, where elite corruption is an increasingly important political issue, tops the table for exporting illicit financial flows by a mile, with a cumulative $2.74tn between 2001 and 2010.

[...]

And as a final statistic, the $858bn estimate of of illicit outflows in 2010 is almost 10 times more than the $88bn of official development assistance received by the countries in the study during the same year. All this money could be put to better use by governments of developing countries and in some cases could make all the difference to public spending. Zambia’s losses over the decade, for example, are estimated by GFI at $8.8bn, just under half of its annual GDP.

I'm happy that, four years after the crash, people are finally starting to wake up to the fact that corruption is one of the great problems of our economies, and that it needs to be stopped. Long-term, this is bullish for developed markets.

Tuesday, December 18, 2012

Yeah, so the idea is that you should sell your gold and silver now cos the 30s/2s spread is growing.

So explain why platinum and palladium also tanked with gold and silver today?

Why should platinum and palladium go down? They're industrial metals, used in the auto industry. A widening 30s/2s should mean Pt/Pd should go up.

In fact, if the idea is that we should sell gold because the 30s/2s is widening, "indicative of the market pricing in a better global growth story", then why should silver go down? It's an industrial metal, used in electronics and solar power.

So I don't buy the 30s/2s theory. Again, there's no fucking theoretical reason for it anymore, since well over 50% of gold demand comes from emerging Asia; improving economies means gold goes up now.

But on top of it, the moves in Pt/Pd today were wrong. So the 30s/2s argument is evidentially wrong.

It was obviously just some coked-up hedgie puking his over-leveraged paper position into thin bids.

Either that, or some news came out at 11AM today that proves the worldwide economy is collapsing.

Ritholtz's Pet Commie - MSM media figures out banks are criminal enterprises. One of my preconditions for a secular boom in the US economy is the return of rule of law, accompanied by the abandonment of speculative synthetic investments in favour of assignment of capital to productive endeavour. But in order for this to happen, the US mindset must radically change: the fruitcake wing of the Republicans has to be exterminated, and the media has to stop giving a free pass to the parasite class. Looks like we might get there sooner than later. (The collapsing reputation of the bond ratings agencies will help too.)

Kiron Sarkar - daily update. Most important to me here is that Sarkar is finally bullish miners!JC Parets - Nasdaq equal-weight paints a different picture. Again, it's a moron who doesn't look under the hood of his indicators. Parets is no moron, which is why he's on my required reading list every single day.BI - trader explains why gold tanked. Simply put, it's because some large hedge fund liquidated when they say the 30s/2s widen. As I said, the 30s/2s has nothing to do with the price of gold; but that doesn't stop some dumbfuck at a hedge fund from acting like it does. And since the hedge funds have been losing money hand over fist for the past 2 years, it probably means we shouldn't be concerned beyond this short-term bump.

Yet China's still strong, VALE is still 3SD up, UUP is going strongly down, IEF is 3SD down. So frankly, I don't see where the urge to dump PMs is coming from - industry is fine, EM is fine, and the market seems to signal coming inflation.

Yet the PMs are going 3SD down on large candles, which may signify a real assbreaker of a PM crash.

So I got a bunch of bills to pay and a doctor's appointment today, and maybe some shopping to do. So I won't worry.

Check it out. While all you guys were fretting about $HUI and GDXJ and the explorecos:

Uranium has made a bold and vigorous move.

Mickey Fulp's thesis was that the recent drop in uranium happened because the US government made a big U sale despite promising the industry to keep a floor price for U.

With that sale done and gone now, and the bombs-to-fuel program finished, I think right now Mickey will be saying that this is the time that uranium begins to pick up again and dig itself out of this hole.

Sunday, December 16, 2012

It actually looks like it would have been a good idea to buy gold miners when RSI was strongly negative and MACD crossed up, and then dump gold miners when RSI was strongly positive, and MACD crossed down.

Now we're back in a time when RSI is strongly negative, and maybe MACD could cross up?

Here's the weekly:

Again who knows, except the weekly RSI was very contrarian bearish in September, and now it's not.

Frankly, I'd think if you're one of those bozos who bottom-feeds, this is more a time to be buying goldminers, not selling.

Wednesday, December 12, 2012

My opinion? Good. The Bush Tax Cuts were a fucking stupid fuckup that fucked up the US fucking fiscal position. Get rid of them. Tax the rich. Then the deficit disappears and the fucking Rethuglicunts have nothing to complain about.

So if you'll remember, I said during my Cambridge Toronto review that several people were all bullish on Rye Patch Gold. They figured RPM was a shoe-in to win a court case defending their right to squat on someone else's mine.

The green lines delineate the "bear flags" that you've already become familiar with: it slowly and painfully claws its way up from the -2SD Bollinger band, then just when you think the coast is clear it collapses back down into the pits of despair.

The red arrow indicates my world-weary response: "oh look, it went up to the short EMA and Bollinger mean again. So it'll probably fail again."

Looks like Gary's $HUI 420 is still in the cards, except for it to get there now it'd either have to grind down slowly, or punch through in a vicious selling puke that goes -3SD.

Wouldn't touch GDXJ under $22.50 here, and even if it went over I'd expect a pullback.

Beyond Brics - Colombia, Peru cheer EU free trade deal. Otto might be interested in the part where they talk about booze. Then again, I'd expect domestic Peruvian booze is cheaper than imported, even without duties (which from my own Canadian experience are never eliminated with a "free trade deal"), and I doubt he's all that picky.

Tuesday, December 11, 2012

If the White House and Republicans don't reach a deal, however, the estate tax rates are set to revert to Clinton-era levels, when estates valued at more than $1 million were taxed between 37 percent to 55 percent.

Yet another real, underlying, unstated reason why the rich are against letting the US go off the fiscal cliff. Add that to the increase in dividend and cap gains taxes. Now you know the real opinion of every single talking head.

Y'know, when I look at the "fiscal cliff" deal that was made earlier this year, I really gotta say those Republicans really fucking screwed the pooch in an epic way. I mean, this was the deal:

Osama Fartbongo: Hey, let's set up this deficit commission so that if we don't come to a solution, a bunch of sequesters and tax increases automatically take hold. Good idea, eh? Oh plus the Bush tax cuts expire.

Republicans: Hey, great idea! Then you'll have to cave in or we'll have you over a barrel!

Now assume the Shanghai is a proxy for wealth creation in China- not the FXI which is full of SEOs, not the other ETFs which are full of the few stocks roundeyes are allowed to buy, but the $SSEC with its domestic-only stocks.

Assume also that Chinese buy at least 21% of world gold production. Because it's fucking true is why.

Now look at gold:

Do you see?

Gold also has three up days in a row.

Not as strong because India is topping out right now and they also buy a significant share of gold production. But still.

Sunday, December 9, 2012

So as I was saying earlier this week, I find it intriguing to think about the imminent Kaiser Extinction - where several hundred explorecos are about to disappear off the face of the earth.

The idea is, there's a load of companies out there with nothing to show for several years of "exploration"; they can no longer finance without it being prohibitively dilutive, some can't finance cos of the 5-cent rule, and now they have so little money left at bank that they can't even afford the cost of quarterly Venture filings and a P.O. Box. In the words of Brent Cook, who's been a big proponent of Kaiser Extinction Theory, they're "just going to... [dramatic pause] go... away...."

Now, here's the thing.

OK. If all you can show for 3 years of hookers and blow exploration is a VTEM conductor or a soil sample, then sure. I get it. You have nothing, you'll continue to have nothing, the door has closed on your continued existence, pack it in.

But there are also companies out there who have seen their market cap collapse, but who do admittedly have deposits that should be worth something. In some world, maybe not this world, but in some world.

Why is the Great Kaiser Singularity occurring? If it's because the capital markets are scared of a US recession, a Euro depression and a China collapse, then I can see why nobody considers a property worth pursuing anymore if its break-even point is $2.50 CU or $1400 Au.

But if the US has already bottomed and is going to start growing strongly this year, and if the Euro has already hit bottom and will begin to see improvement soon, those two things alone should create enough aggregate demand to bring China back up to >8% growth, no? In which case all of a sudden China is fine again. And then the rest of the world is fine again.

In which case we get back to thinking that demographic-driven demand growth will continue, and with the supply contraction that's happening we get back to assuming inflationary pricing for PMs and base metals.

Point being, if a company has been slaughtered down to a $5M market cap, but you've got some analyst who swears up-and-down that e.g. no really honestly at $3 Cu this property is worth $500M on buyout, then really, they shouldn't "just go away", should they? Cos they have something of value. Just not of value right now with all the worries about the world economy.

So if I'm the CEO or director at some exploreco with a property that definitely is worth a hell of a lot more than the market's giving us credit for, and I see the bank is down below $200K, why wouldn't I offer to privately finance the company, for say a $200K placement, even at twice the present share price with no warrant? It keeps the company going for a year, after which time we'll have a better read on whether the world economy has moved back into growth mode.

Even if it's only a 40/60 chance that we move back to strong world growth in 12 months, and I finance at twice the price, I only need a 5-bagger to even out the risk-reward. And there's a heck of a lot of companies out there who would be 5-baggers if the damn world economy just turned around, no?

And I'm saying it's a lot more than a 40/60 chance that the world economy is better 12 months from now.

So really, if there are any tuppence-ha'penny explorecos out there that really definitely have a deposit of value, thennow would be precisely the time to gobble up their shares, no?

(Of course this thought process didn't stop me from selling my 7-cent AQM shares for 10 cents on Friday... but you get the point.)

der Spargel - light at the end of the Eurotunnel. Since the Eurozone is something like the developed world's third largest economy (dunno where you'd fit Japan, but it's not like they're going anywhere anyway), what does it mean to export demand in the US and China (and even Mexico) if the EZ economy has bottomed? Hm?

BI - Weezie's happy to see the Euro plunged. It's a very interesting point that proves that Wiesenthal has his head screwed on right: the Euro reacted to the ECB policy announcement the way it should have. Which also indicates the EZ is out of crisis mode.

Now if only Business Insider could get rid of those fucking idiot lamestream-media neo-Nazis who "write" for them like Pethokoukis, Richter, Doug Short and so on, they might have a decent reliable newsfeed that people would profit from following.

And two on gold:

FT Alphaville - on Goldman and the gold price. It touches on Tanashian's idea that OT artificially capped the price of gold; it always sounds like a conspiracy theory when he says it, but the basic argument (from Goldman) is expounded on in this article. I don't pretend to understand it, and I think the argument only applies to gold futures and not the physical market, and I still think real supply and demand should be a strong counter to the paper market; but it's enough to make me stop and think.

And that article references this:

Krugman - Treasuries, TIPS and gold. From last year. Still wonkish but relevant. Though as some commenters on these articles note, the "choke price" seems to be one of those things that magically appears when you doodle economics formulas on a napkin, and not something that can actually be tagged and collared in real life.

I don't pretend to fully comprehend either of those two articles, but since the internet's started talking about them, I think we'll find further, deeper explanation soon.

I dunno who came up with the idea, but Otto Rock & I ended up conducting an on-again off-again interview by mail for the past few months. Eventually we called it quits around 3000 words; as I told him, "you're not Michel Foucault expounding on power/knowledge structures under late capitalism."

I find introductory writeups to be a waste of time, and you all are more interested in reading the interview anyway, so here you go:

THE GREAT OTTO ROCK INTERVIEW

ME - Both on your blog and in your newsletter, you get quite wound up about honesty, integrity and social responsibility in the mining and exploreco scene. It seems you're not just being pragmatic about your own investments, you're taking this stuff personal. Why do you give a shit, really?

OTTO - I've asked myself the same question infinite times and there's no real answer, man. The closest it gets is that I want the good guys to win occasionally. I'd like the greenhorn investment community to get smart more quickly and recognize the sharks they're up against. I want to shine a light on the way in which trusting souls are parted from their money by sociopaths, or people aiding and abetting sociopaths for their own ends.

ME - So are you an outright communist, or just someone who reads the Guardian? Seriously, I'm sure some of your critics want to know....

OTTO - I admit I read The Guardian (aka The Graun, for those who have memory as to why) but I only started reading it a couple of years ago when that fucker Murdoch put my favourite newspaper, The Times, behind a paywall. Since then I've kinda grown fond of some of the reporting at Graun, but there's still a lefty handwringing voice in some of its stuff that drives me up the wall. So no, I'm no Commie (sorry to disappoint some of you on that and feel free to disbelieve, I don't give a toss). What I am is a person who sees the potential for good in capitalism (and specifically capital markets) that's often overrun by an obscene amount of greed. When that greed is sourced to stupid people, it raises my basic red flag.

ME - so really, down deep, you are a nice person?

OTTO - That's not something up to me to decide. I'm a person that's developed his own set of values and they're probably similar to one section of society but different from another. I really don't know how to answer that question, because 'really deep down' goes way beyond my professional life and is about the way I interact with the people closest to me, wife/kids/friends/family and all that jazz. Care to rephrase?

ME - okay, professionally speaking, you're a nice person?

OTTO - Professionally speaking I have a set of values and I stick with them. But that means I can be an asshole, openly and without quarter, to people who are in my opinion assholes. It's all subjective, y'see? Why not ask the scumbags I've written about on the blog whether they think I'm a "nice person".

ME - I guess, if I'm an IKN subscriber, I don't want you to be nice. I want you to make me money. If I were to see you get suckered by something like Liberty Silver, or purposefully fuck me over with bad analysis, that would be enough to make me dump the sub in a heartbeat.

OTTO - I don't think I really understand what nice means in these circumstances. Isn't "nice" some personal quality, something that's more important to my wife than to professionally contracted clients? I mean, it's probably not important to know whether I go to church on Sundays, either. Aside that, I'd agree that the way to judge any market analysis service, IKN or other, junior mining or any other sector, is what it does to help the reader. That boils down to getting the calls right, which in practical terms is likely about calling buy on a stock that subsequently rises but can also mean something like getting a macro/political risk call right and then letting the reader base their own portfolio decision around the correct big picture call. But yeah, get the calls wrong and go out of business. Quite right too.

ME - Recently you've started recommending shorts in your newsletter. I find it surprising you haven't been doing this for years, given how easily you seem to see through bullshit.

OTTO - Good question. One thing is that my target audience is a retail investor who plays the Canadian market (sidebar: verb "play" chosen deliberately). It's not easy to short juniors in Canada and the two recent short calls are both listed in the USA, which makes it easier. The Weekly tries to be actionable in its calls, therefore a short call on a stock has to be useful, else it's only theoretically fun. Or put another way, I much prefer to call "avoid" on a Canadian listed junior and not enter the arena of the big insto players with the oomph to move thinly traded, sub-loonie stocks on a whim. Another thing is that I'm chickenshit and shorting takes more balls than going long. Another is that I'm naturally optimistic and prefer highlighting potential "ups" as investments instead of potential "downs". On that score (and on the chickenshit score) I admire people like Doug Kass more than I could possibly say in a few words.

ME - You certainly could have made a heck of a lot of money shorting nearly the entire junior scene for the past 18 months....

OTTO - True, it's been nasty and particularly the six months of March to August 2012.

ME - I've asked another newsletter writer why he doesn't broaden his own newsletter to bigger macro plays - after all, he seems to make some good macro calls. But he feels he'd lose a large part of the goldbug crowd if he started e.g. calling a buy on a Thailand ETF. You're in Latin America, and so you have a boots-on-the-ground insight that you use in your mining analysis. Have you ever thought of spreading out to covering, say, US-listed LatAm stocks? Cellphones, beer, retail, construction, that sort of thing?OTTO - There aren't enough hours in the day. For me at least, unless you're blessed with a superhuman memory and superhuman analytical skills (I have neither), if you want to get deeper into a sector and understand the bits that aren't as apparent, you need to spend time, focus evermore sharply and your time gets sucked away. If those extra layers of understanding then come that's a good thing, but then it's unsatisfactory to transfer to another sector, perhaps write a report on a bank or an O&G and not be able to put the same amount of insight into the report as in your specialized subject. Well, it is for me anyway. There's a lot to be said for the 80/20 type of skillset that can easily be transferred from one sector to another and catch the main points of any company then make a decent, well-rounded call on its future (after all, a balance sheet is a balance sheet no matter what sector the company works). That I suppose I could do, but frankly I'd get bored because I like delving into the mysteries and uncovering the layers of a single sector, it's how I keep myself intellectually stimulated.

ME – So what happens when the great commodity supercycle ends? Do you terminate your newsletter?

OTTO - I have enough problems thinking two weeks into the future, never mind ten years. And ending the newsletter means that my wife would get very bored with me very quickly as I hang round the house and bug her about stupid stuff, so for the sake of my marriage it's better that I'm writing something.ME - While we're on the topic, I've been thinking for a while now about EM growth. While China's going to hit a demographic cliff that constrains growth, and while maybe the rest of Southeast Asia will become the big growth story over the next decade, I can't help but think that maybe Latin America could end up being the big success story of the 21st century. Mexico's apparently becoming a manufacturing superpower, and countries like Chile and Peru have a lot of free money they can dig out of the ground to fuel growth. What do you think of Latin America's chances? Is it all down to how many of their politicians screw things up? Or is there something else that could hold them back?

OTTO - The greatest and most positive development I've witnessed in my time in South America (and I arrived in late 1997) is the way the region as a whole has risen up and stopped taking shit from the industrialized North. Part of that has been luck, what with just about every country in LatAm being net exporters of commodities that have become more valuable since the start of the 21st century (Argentina agro, Chile copper, Venezuela oil etc etc) and the respect that comes from having more money in the collective regional back pockets shouldn't be underestimated. But that's just one of the means to the end, not the end itself. It doesn't matter what side of the political spectrum you look at either, because from Uribe's Colombia to Morales' Bolivia there's a new self respect in the countries. If foreigners want to deal with any country in LatAm you won't get any more kowtowing, you either treat them as a 50/50 partner or you don't get your deal. That's true on a national governmental level and all the way down.

The biggest single threat to LatAm's continued emergence is the level of institutionalized corruption. It's a tough one to tackle, because on a political level (which after all is merely a microcosm of any country's society) you might have a new, unblemished and vigorous leader coming in on some kind of "corruption zero tolerance" message, but without a party apparatus she or he will be left twisting in the wind after a while. And the party apparatus is chock full of the people who have been immersed in corruption and how to make it in LatAm politics all their professional lives; they all have skeletons in their closets, and due to that it's very difficult to get these people to blow the whistle on one another. In that way it's a bit like the Canadian junior mining scene! On a practical level, corruption and the way vast sums of money have been (and still are) siphoned off from the general population in order to maintain the lifestyles of the few holds back the region. The sums of money involved really are vast too, they're the difference between building new hospitals or not, between training teachers to educate well or keeping with the current mediocrity. Companies that want to do business in LatAm know that a $10m bung to this-or-that person means they will be able to remit $50m more per year once their business is up and running, money that would otherwise go into state coffers.

ME - You said after my 2012 PDAC newsletter writers review that one reason the post got a lot of hits from writers themselves is that deep down they think that they're idiots and nobody believes a word they're saying. It seems strange that there would be so much self-doubt in the analyst industry: when you work in investment, isn't massive self-confidence one of the job requirements?

OTTO - Fuck self-confidence. There's a lack of humility in company analysis and it drives me mental. A third party cannot possibly look at a company and "know" anything about it that isn't known by those inside the company. The third party can bring a different perspective, can see events in better or worse lights, can applaud or criticize happenings. But the amount of "absoluteness" (is that a word?) in the analysis biz, especially the sellside, is a sure sign of intellectual dullards behind the keyboard. The more you read smart analysts (and although there are others I'd point a finger at Ron Stewart of Dundee as an example off the top of my head) the more you read humility, talk of probabilities rather than certainties, examination of risks rather than ignoring potential problems, comments that suggest future unknowns.

ME - I guess one of the reasons you see certainly in the insto analysts is because, down deep, they're certain they want you to buy the stock that they plan to unload in 4 months' time.

OTTO - It's called "sell side" for a reason, dude. This is part, just one part, of that thing I mentioned before about wanting to make the retail investor just a little bit less naive about the sharks with which they've decided to swim. There is money to be made in the sector and it's perfectly possible for the individual retail investor to make money from investing in junior mining. In fact there are some aspects that give the individual a distinct advantage over the instos, funds and bigger money players. But far too often I see an overly trusting attitude displayed by Mr or Mrs Retail towards the people they interact with on a regular basis; they can go as far as to think their broker is their friend, for crying out loud! There are good and honest and trustworthy people in the junior world, but even then there has to be a difference between the way I unconditionally trust my brother and my considered opinion after time and evidence that Mr X is a trustworthy person....and that's at the good end.

A human trait is to be trusting and it's from that basic instinct that the pondscum of the market feed. You, the retail investor with a pocketful of money and dreams to make it rich in the stock market, cannot afford to trust anyone from the getgo. Start everyone at zero trust and if they're worthy, they can move up the scale. Don't start them at 100% trust and feel disappointed when they rip you off, because they will and they'll do it again and again. Simply because they can.

ME - but as for newsletter writers, frankly why should any of them care what a joker like me says about their PDAC talk?

OTTO - Honesty scares scumbags. Newsletter writers are either a) scumbags or b) honest but scared of being lumped in with the scumbags. That's a nice recipe for neurosis, no?

ME - There's the time, after I facetiously posted something about most analysts not having a clue what they're doing, you basically agreed with me. But it's not so hard, is it? You have no problem reading financials, I taught myself DCF analysis for my job. Shouldn't these guys have learned this stuff in school?

OTTO - Numbers are numbers. What the brain does with the numbers afterwards is the key. To expand a little, I think that TA is mumbo jumbo but I recognize that away from the 99% of stupidity the "science" collects, there are people like Gary Tanashian (biiwii.com) who can look at a chart and make an intelligent, reasoned and analytical interpretation of what they see. Analysis, be it FA or TA, isn't an absolute science but an applied science. Numbers are not a finishing line, they're the starting point. School allows you the advantage of education, but intelligence is another matter.

ME - I know I've had some "teaching moments" that I've learned my lesson from in the past year - e.g., don't expect a mine with 1 year's worth of reserves to ever trade at more than 2x-3x cashflow. Or an even better one, stay the fuck out of the market when the sellers are desperate. What have some of your own recent "teaching moments" been?

OTTO - It's never-ending, but the biggest one I've taken away from 2012 is that I have a weakness facing up to value traps. I can't even say I've learned the lesson from that one yet either, but what I can say is that 2012 has forced me to recognize my weak points. The basic problem with the fundies guys like me is that we base our analyses and forecasts on value, for example "Stock XYZ is priced at 1 and I think that's a fair value, so I'm not going to buy it. But Stock ABC is priced at 1 and I think that's cheap, considering all the things it has and what it's likely to do in the future, so I'm going to buy that one." So if the broad market stays roughly the same, you get to test your thesis, but if things start to get rough and stocks start to go down, I the weak brainless dumbass fundies guy think one of two things: a) "Gosh, 20% cheaper now! Good value becomes GREAT value! I'll buy some more!" b) "Huh, this is stupid! This stock is worth tons more than this, no way do I sell!". Then if things become worse and the sector drops even more, those thoughts become their own private vicious circle.

ME – well, it’s now the beginning of December, and it looks like what we’re seeing is the “Mass Extinction” of the explorecos, as John Kaiser’s calling it. Long term I don’t get where the fuck they’re going to get all the new gold deposits if all the explorecos disappear; and outside of a collapse of Asia I don’t see gold demand disappearing. You still bullish on the PMs, and the base metals, long-term?

OTTO - Long-term we're all dead (tish-boom! I'm here all week, try the veal). I'd frame the next 12 months as a more useful time window and say yes, I am bullish the sector. Not blanket bullish over the sector and all who sail in her, but bullish enough to be net long junior miners in the stocks I prefer.